Beer Takes Back the Summer

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FILED NOVEMBER 2, 2012

Dear Client:

Perhaps it was the weather, a mixture of improved marketing and innovation, or all of the above, but the beer industry had the best summer it has seen in quite some time. Bring it.

Let's take a quick trip down memory lane:

Summer 2010: Bottom line, it sucked. Volumes were down -0.9% and dollar sales were up 1.5%. The only categories posting significant growth in the beer industry then were PABs, craft, cider and imports [per SymphonyIRI data in the 20 weeks ending Oct 3, 2010 across all off-premise channels].

As you can see, volumes and sales improved significantly by several percentage points in the summer of 2012. Perhaps even more importantly, domestic premiums played a part in that growth. Yes, craft, PABs, super-premiums and cider remain the growth leaders. However, domestic premiums went from being down -0.9% in volume in 2010, to flat in 2011, to up +0.8% in 2012. Brand life cycle? Maybe not.

MillerCoors, meanwhile, grew volumes and sales by 0.3% and 2.7%, respectively. It still lost some volume share (-0.6 points) and dollar share (-0.7 points), however. But it's a big swing from Summer 2010.

THE TOP PLAYERS. So who lead in growth during the summer? Yuengling took the lead with case sales up 32.8% and dollars up 34.5%. With that they took 1 point of volume share and 1.1 point of dollar share.

Next came many of the large craft players led by Sierra Nevada with volumes and sales up 15% and 16.6%, respectively. Next was Boston Beer with volumes gaining 13.4% and sales up 16.9%. New Belgium grew volumes and sales by 12.8% and 14.9%, respectively. Pabst gained 8.6% in volume and 9.7% in sales. And finally, Gambrinus was up 7.2% in volume and 11% in sales.

Diageo, meanwhile, struggled with volumes down -5.6% and sales declining -3.9%, which was lower than their results in summer 2011.

THE WINNING BRANDS. Dos Equis had a strong showing this summer, with volumes up 33%. That was followed by Modelo Especial (24.5%), Yuengling (23.3%), Pabst (22.5%), Michelob Ultra (11.3%) and Blue Moon (9.5%).

Turning over to A-B, Bud Light was solid with volumes up 1.2% and sales gaining 2.8%. This was improved from Summer 2011 where volumes and sales rose 0.4% and 1.4%, respectively. Budweiser suffered with volumes down -5.4% and sales declining -4%. However Bud Ice was steady with growth stats of 3.5% and 6%, respectively.

Coors Light remained the darling of MC, with volumes gaining 3.9% and sales up 5.8%. Miller Lite also performed well this summer, growing 1.9% and 3.4%, respectively.

As for the large imports, Corona saw volumes and sales rise 0.4% and 1.4%, respectively, while Corona Light was up 2.4% and 3%. Case sales of Heineken climbed 2%, while sales were up 1.8%.

Bottom Line: We feel good about this summer as things seem to be turning around for the beer industry. As Dan Wandel of SIRI told us, "I think you will see that there are many data points here to help support all the recent chatter about the beer category being back with a vengeance."

PA CITIZENS OVERWHELMINGLY WANT TO PRIVATIZE

At a ratio of 2-1, Pennsylvania citizens favor privatizing the state's alcohol industry, according to a new Inquirer Pennsylvania Poll. That's not good. In the poll, 61% of respondents said they also support allowing grocery stores to sell beer and wine, reports Inquirer Harrisburg.

The poll surveyed 600 likely voters and found 55% of people surveyed support privatization, 28% oppose it and 17% did not know or did not answer.

Survey respondent Claudia Utti said the state-controlled system was "kind of goofy." She said the state-run store employees are "grouchy" and she keeps her communication with them to a minimum. "When I am looking for something, I just try my best to find it by myself," she said.

You may recall House Majority Leader Mike Turzai, along with support from Governor Tom Corbett, has submitted two plans for privatization in the last two years, neither of which made it to a full floor vote. The most recent of which would create 1,600 retail outlets to replace the present network of 620 state-owned stores, and allow beer distributors to be first in line to obtain retail liquor and wine licenses.

However, Pennsylvania's two-year legislative sessions is about to end and if he wants to continue pushing for the cause he will have to start from the beginning with a new bill next session. A spokesman for Governor Corbett's office said the administration is working to come up with a privatization proposal to be presented early next year.

He says Privatization will be "among the top legislative priorities in the next session."

BEER BRIEFS:

A-B NAMES DIGITAL AGENCY OF RECORD. Anheuser-Busch has named AKQA as the lead digital agency for its Budweiser, Bud Light and Stella Artois brand families. In its new role, AKQA will work in tandem with each brand's marketing agencies of record, Budweiser's Anomaly, Bud Light's Translation and Stella Artois' Mother. "The importance of being able to connect with consumers digitally is at an all-time high, and AKQA has demonstrated they have the expertise and strategic insight needed to elevate our digital efforts to a new level," said Paul Chibe, A-B's vp of U.S. marketing.

BOSTON BEER CO. posted another great quarter. Depletions were up a huge 15% for Q3 and 11% YTD. Core shipment volumes were up 17% for Q3, and 11% YTD. For 2013, Boston is projecting depletions and shipments growth in the high-single digits, and "targeted price increases per barrel of between 1% and 2% to partially offset anticipated barley, hops, other ingredients, packaging freight and processing cost pressures."

THANKS TO THE FOLKS AT Reyes' Premium Beverage of VA for showing me around the place and being candid as to how they go to market. Very tech and measurement-rich they are. Saw some cool custom iPad/iPhone beer selling apps. I'll have more on that later.

OUR OWN CRAFT BEER EDITOR Jenn Litz was featured in an Associated Press pic in papers all over the country charging her cell phone on a generator in Manhattan yesterday. Jenn walked miles and miles uphill and found power in order to publish CBD this week (twice yesterday). That's her boyfriend Bill helping. They haven't showered in days. That's dedication.

Until Monday, Harry

"Another belief of mine: that everyone else my age is an adult, whereas I am merely in disguise."-Margaret Atwood